New research by The MarketPlace at Bradford & Bingley, the UK's largest IFA, reveals widespread apathy amongst homeowners towards interest rate rises.
Findings show:
* A massive 80% of adults in the UK, are either not worried at all or only slightly worried about interest rates rising in the near future.
* Interest rates rising this year won't encourage over half (58%) of homeowners to remortgage to a better deal. Only 8% will definitely remortgage if rates rise by the end of the year and more than one fifth (22%) will want to see another rise before they even consider it.
The research also shows there needs to be a substantial rise in interest rates and monthly mortgage payments before the majority of homeowners will even start to think about a better mortgage deal:
* 54% of adults in the UK say that there will need to be more than a 1% interest rate rise before they would consider moving their mortgage to a better deal.
* Nearly two thirds (62%) of homeowners would not be concerned about an increase in their mortgage repayments until they had increased by over £50 a month, with an apathetic 35% having no serious concerns until they saw a £100 or more increase.
Commenting, Elliot Nathan, product development manager for The MarketPlace, said: "Our research shows the majority of homeowners are completely apathetic about an increase in interest rates and are waiting to see big increases in their monthly mortgage repayments before they will even consider reviewing their current mortgage. While it is right that borrowers should not be overly concerned about potential rises in the Base Rate - as they are likely to be moderate - for 62% of borrowers to bury their heads in the sand until they see an increase of over £50 a month is alarming when they can remortgage and save this comparatively easily.
Why now is the time to remortgage
The MarketPlace figures show that 2.32 million borrowers are currently on standard variable rate and will not move should rates rise. However, if these people were to shop around now and remortgage they could save £124 a month — that’s £1,488 a year — a saving that could easily offset the cost of as much as a 2% rise in the Bank Base Rate.
These savings could be achieved with an exclusive 2 year discount mortgage recently launched by The MarketPlace. The deal, funded by Alliance & Leicester, has an initial pay rate of just 3.39% (5.3% APR), a refund on valuation fees, £250 cashback and an arrangement fee that can be added to the loan thereby offering a low cost remortgage.
Nathan concludes: "As our research shows there is definitely a wait and see attitude amongst homeowners which means they may be missing out on the best deals currently available. A staggering £3.45 billion is being wasted by consumers on standard variable rates not remortgaging. By shopping around these people could easily counter any predicted Base Rate rises and we strongly advise them to take action now before it's too late."
To spur borrowers into seeing how much they could save, The MarketPlace is offering borrowers an obligation free review of their current mortgage arrangements. It gives homeowners the chance to see whether they can get a better deal than the one they are currently on and to see how much they could benefit by switching.
